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Hello, This is the question I need assistance with Thank you 10. Expand-or-Nduce decision. Janet is director of labs. She has some extra capacity and

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Hello,

This is the question I need assistance with

Thank you

image text in transcribed

10. Expand-or-Nduce decision. Janet is director of labs. She has some extra capacity and has contracted with some small neighboring hospitals to run some of their lab tests. She has recently had a study conducted and has determined that her costs for these contracts are of which is the variable cost of sup- plies. rest is nonavoidable fixed cost. She currently charges an average Of $20 [Yr test. She is thinking of lowering her price by 20 percent in ho-iws of raising her current volume of 10,000 tests by 15 percent. If she dcs so, she her varia- ble ccBt Irr test will go up by 4 prrcent. Determine the current and predicted: rev- enues, variable costs, and total contribution margin and product margin. What do you recommend she do? Why?

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